Fargo city leaders followed West Fargo's lead Tuesday, deciding not to place price limits on tax exemptions for new homes.
After much debate, city commissioners voted 3-2 to extend the two-year exemption for another year.
The exemption covers $75,000 of the building value of new single-family homes, duplexes, townhomes and condos, regardless of price.
Commissioner Mike Williams tried to restrict the exemption for more expensive homes. His amendment was defeated on a 3-2 vote, with Linda Coates voting in favor and Mayor Bruce Furness, John Cosgriff and Tim Mahoney voting against it.
The graduated scale would have reduced the exemption by $5,000 for every $5,000 in building value over $175,000. Homes valued at $250,000 or higher would be ineligible.
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Williams said his proposal would target the exemptions at first-time homebuyers who actually need them and send a message that the city realizes it has a problem with rapidly rising property taxes.
"We have a responsibility to people on fixed incomes. We don't have a responsibility to people building half-a-million-dollar homes," he said.
The trio who supported the exemption said the city also must maintain a level playing field with West Fargo, which recently extended its unrestricted $75,000 exemption through 2006.
"I think it puts us at a competitive disadvantage if we're on a different schedule as West Fargo," Furness said.
"We're in a metro area, and are we going to follow or are we going to lead?" Williams replied.
Cosgriff pointed out that when Fargo had price and geographic restrictions in place, its share of the metro housing market dropped from 56 percent in 2000 to 33 percent in 2004.
During that same time, West Fargo's share increased from 23 percent to 41 percent.
Two years ago, Fargo lifted all restrictions for homes built after Feb. 1, 2004.
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The city granted the exemption to 405 homes last year for an average tax savings of $1,263, according to the city assessor's office. The median sale price was $192,500 for single-family homes and $127,100 for twinhomes.
Readers can reach Forum reporter Mike Nowatzki at (701) 241-5528
